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HomeMy WebLinkAboutRes2018-082 Sponsored by: Bridge= CITY OF SEWARD,ALASKA RESOLUTION 2018-082 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE ELECTRIC UTILITY MANAGER TO SIGN THE MEMORANDUM OF UNDERSTANDING FOR THE CREATION OF THE RAILBELT RELIABILITY COUNCIL AND SUBMIT TO THE REGULATORY COMMISSION OF ALASKA WHEREAS, the Regulatory Commission of Alaska (RCA) is intent on seeing this organization formed; and WHEREAS, one of the main objectives of all electric utilities is the reliability of the power provided to consumers; and WHEREAS, another main objective of all electric utilities is to deliver power at the lowest cost to its consumers; and WHEREAS, the six Railbelt Utilities, including Golden Valley Electric Association (GVEA) in Fairbanks, Matanuska Electric Association (MEA) in the Palmer/Wasilla area, Municipal Light and Power(ML&P) in Anchorage, Chugach Electric Association (CEA) also in Anchorage, Homer Electric Association (HEA) in Soldotna/Homer area, and the City of Seward (SES) or (COS) in Seward, are working on the formation of the Railbelt Reliability Council (RRC)to ensure its consumers a more reliable service; and WHEREAS, the RRC is a precursor to a Railbelt-wide economic dispatch organization; and WHEREAS, having an RRC-type organization gives Independent Power Producers (IPP)an opportunity to build generation and sell to the electric grid; and WHEREAS, if funding is required in support of the deliverables as outlined in the MOU, a separate resolution will come before Seward City Council for approval; and WHEREAS,this organizational model is similar to many areas around the country. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Electric Utility Manager is hereby authorized to sign the Memorandum of Understanding (MOU) on behalf of the City of Seward for the creation of the Railbelt Reliability Council (RRC)and submit to the Regulatory Commission of Alaska(RCA). Section 2. This resolution shall take effect immediately upon adoption. CITY OF SEWARD,ALASKA RESOLUTION 2018-082 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 1s` day of October, 2018. THE CITY OF SEWARD,ALASKA 0)CLQ/12//li ) (AYs Mari nna Keil,Vice Ma or AYES: Seese, McClure, Towsley, Casagranda, Horn, Keil NOES: None ABSENT: Squires ABSTAIN: None ATTEST: � 4VA, • renda J. Bailout C City Clerk (City Sea141,4•y pF 7 • SEAT, `mm OF 111 Os diildd FB t u'4�9 FISCAL NOTE: Funding for this organization is unknown at this time, but will come from member dues and an annual administrative fee approved by the RCA before implementation. See section 8 of the MOU. Approved by Finance Department: �� ATTORNEY REVIEW: Yes X No RECOMMENDATION: -------- Council approve Resolution 2018-082, approving the Memorandum of Understanding for the creation of the Rail belt Reliability Council. Page 1 of 6 Railbelt Reliability Council (RRC) MEMORANDUM OF UNDERSTANDING (MOU) Among Anchorage Municipal Light and Power Chugach Electric Association Golden Valley Electric Association Homer Electric Association Matanuska Electric Association Seward Electric System (Railbelt Utilities) September 4, 2018 1. Railbelt Utilities. This Memorandum of Understanding (MOU) is made and entered into among Chugach Electric Association, Golden Valley Electric Association, Homer Electric Association, Matanuska Electric Association, Anchorage Municipal Light and Power, and Seward Electric System (Railbelt Utilities). 2. Purpose. This MOU memorializes the agreement by the Railbelt Utilities to proceed with the creation of the Railbelt Reliability Council (RRC) and the concurrent adoption by the RRC of a formal Business Plan (Plan) that when implemented will ensure reliability benefits for electric consumers in the Railbelt. This MOU outlines possible RRC functions as identified in Section 4 and operations necessary to realize those benefits including regulatory oversight, scope of responsibility and authority, governance structure, and funding which will be key components of the Plan. The Plan is anticipated to be completed by the end of first quarter of 2019. The Plan and quarterly updates of the Plan’s status will be filed with the Regulatory Commission of Alaska (RCA). 3. General Provisions. A. Amendments. Any changes, modifications, revisions or amendments to this MOU require unanimous agreement amongst the Railbelt Utilities and shall be incorporated in writing, and effective when executed and signed by all Railbelt Utilities. B. Entirety of the MOU. This MOU represents the entire, integrated agreement between the Railbelt Utilities related to the creation of an RRC and supersedes the Memorandum of Understanding for Electrical Reliability Standards dated October 11, 2017. Page 2 of 6 C. Term. This MOU is effective upon the day and date last signed and executed by the authorized representatives of the Railbelt Utilities to this MOU and shall remain in full force and effect until the creation of the RRC and its adoption of the Plan unless otherwise unanimously agreed to by the Railbelt Utilities. D. Regulatory Compact. The parties to this MOU agree that the articles of incorporation and bylaws of the RRC, when adopted and submitted to the RCA for approval shall constitute a regulatory compact with the State of Alaska, valid and binding upon the parties. Once the articles and bylaws of the RRC are approved/accepted by the RCA, the parties agree to be bound by decisions of the RRC and any subsidiary organizations organized by that RRC to the extent provided for in the articles and by-laws. If and to the extent required by statute, the RRC will obtain a Certificate of Public Convenience and Necessity (CPCN). E. Benefit. The agreements and obligations contained in this MOU are for the benefit of all Railbelt Utilities, individually and collectively. 4. Railbelt Reliability Council. A stakeholder driven entity shall be : A. A non-profit corporation; B. Organized under the laws of the State of Alaska; and C. Subject to the jurisdiction of the RCA under the terms of its articles and bylaws that shall provide for appeal of RRC decisions to the RCA. Established to: D. Reliability Standards. Adopt, administer, and enforce Railbelt electric system reliability standards including cyber and physical security that: (i) Recognize the unique nature of the Railbelt Transmission System; (ii) Are mandatory and enforceable Railbelt wide planning and operating standards allowing for local criteria; (iii) Are technically sound standards for operations, planning, and physical and cyber security; (iv) Include a compliance monitoring and enforcement program that is subject to the review and approval of the RCA; and (v) Comply with and implement the Electric Reliability Standards agreed to by the Railbelt Utilities and submitted to the RCA on April 17, 2018. The Standards described above will serve as the RRC’s “Version 1.0” reliability standards for adoption, administration, monitoring, and enforcement. Page 3 of 6 E. Interconnection Protocols. Develop, adopt, and administer a non- discriminatory, generator interconnection study process and related interconnection protocols. F. System Planning. Develop, adopt, and utilize a Railbelt electric a system wide generation and transmission planning process, to the extent necessary, utilizing the Railbelt reliability planning standards adopted by the RRC that: (i) Addresses the system reliability issues that pose an unacceptable risk to the integrity of the Railbelt transmission system; (ii) Permits individual utilities the flexibility to develop and implement local planning criteria; (iii) Maximizes the capability of delivery of existing resources to load; (iv) Permits efficient economic integration of new generation resources; (v) Creates a Railbelt Integrated Resource Plan (IRP) identifying new generation and transmission projects if demonstrated to satisfy reliability requirements and being economically justified; and (vi) Develops and maintains the system planning and simulation model for use by all Railbelt Utilities. G. System Dispatch. Perform a cost benefit analysis of a security constrained economic system dispatch function that determines the extent that the economic benefits sufficiently offset the startup and ongoing operating costs. The cost benefit analysis will: (i) Be performed per the cost benefit model adopted and utilized by the system planning stakeholder function of the RRC. (ii) Study various configurations including single and multiple load- balancing areas within the Railbelt to determine the most cost- effective security constrained economic dispatch configuration. (iii) Reflect the effects of existing power purchase and sales contracts, fuel supply and transportation agreements, etc. and any costs associated with eliminating or modifying these contracts as applicable to specific study cases. 5. Other Railbelt Organizations. In conjunction with the RRC development, the Railbelt Utilities are evaluating and planning, pending Board approvals, to develop a Railbelt Transmission Organization (TRANSCO). Any TRANSCO CPCN filing will include the negotiated base cost allocation. The cost allocation for new assets will be adjusted based on relative changes in load. Page 4 of 6 6. Organizational Structure. The RRC organization will be structured as follows: A. Governance. The RRC will be governed by a Board of Directors (BoD) that will consist of 13 individuals of which there will be 12 voting members and the CEO as tie-breaker vote only. The voting members will consist of representatives from each of the six Railbelt Utilities, and from six non-utility stakeholders. The six non-utility stakeholders will be the Alaska Energy Authority, Regulatory Affairs and Public Advocacy (RAPA), two independent power producers (IPP), and two outside non- affiliated members with experience in utility operations and planning functions. The Plan will outline a process by which the IPP and non- affiliated members will be nominated and confirmed. The RCA will designate a commissioner to be a non-voting member. The CEO will be the RRC chairperson. When a Transco is formed and certificated as a public utility it will be added as a voting member. The bylaws shall prescribe the method for selecting directors. The number of Railbelt Utilities and non-utility stakeholders serving as voting members on the BoD must be equal at all times. B. Technical Advisory Committee (TAC). The TAC will be a working group of qualified technical professionals with specific operational, system planning, and management responsibilities that will provide for monitoring of the utilities’ compliance with the Reliability Standards and make recommendations to the BoD as appropriate or other BoD as requested scope of authority duties. The bylaws shall prescribe the method for selecting members of the TAC. C. Audit and Finance Committee (AFC). The AFC will be a working group of qualified technical professionals with specific financial and auditing experience that will insure the financial health of the organization. The bylaws shall prescribe the method for selecting members of the Audit and Finance Committee. D. Staff. The staff will consist of a CEO and qualified technical professionals to provide ongoing expertise in the areas of power grid operations, modeling, reliability, rates, analysis, and IT. E. Members. The entities represented on the BoD will be the initial members of the RRC. The RRC may evaluate the need in the future for an expanded member organization that incorporates sector stakeholders similar to the NEPOOL or ERCOT system. 7. Organizational Controls. RRC organizational controls will be developed, adopted, and implemented. Compliance with the organization’s articles, bylaws, code of conduct, and policies and procedures for the BoD, TAC, AFC, RRC staff, and members will be Page 5 of 6 mandatory. Requirements for the RRC not specifically stated in this MOU will be detailed in the written control documents mentioned and include but not be limited to the following: A. BoD. Duties and powers; composition; positions and titles; voting rights, proxies, and quorums; qualifications; how selected; terms of members; filing of vacancies and removals; actions w/o meetings; committees. B. TAC. Duties and responsibilities; scope of activities; composition and qualifications. C. AFC. Duties and responsibilities; scope of activities; composition and qualifications. D. RRC Staff. Duties and responsibilities; scope of activities; titles; and composition and qualifications. 8. Funding. The RRC will fund its operations through member dues and an annual system administration fee collected from users within the Railbelt pursuant to RRC protocol and as approved by the RRC BoD and the RCA for recovery. 9. Implementation Committee. Following the execution of this MOU, an Implementation Committee will function as described below. A. Composition. The Implementation Committee will have the same configuration as the BoD in Section 6.A of this agreement. Each constituency will select its own representative(s) and the RCA will appoint the two unaffiliated members. B. Scope. The Implementation Committee will be responsible for developing the Plan, hiring services to assist in developing the Plan, developing the annual staffing plan and operating budgets for the first 3 years of the RRC, meet as necessary in person or by electronic means, and keep meeting minutes. C. Costs. Ninety percent (90%) of the cost to develop the Plan will be allocated to the six Railbelt utilities based on load ratio sharing calculated from 2017 energy usage. The balance of the costs will be shared equally between AEA and the IPP representatives. D. Deliverables. The Implementation Committee will be responsible for creating the Plan, written control documents, and professional qualifications for BoD, TAC, and AFC. Page 6 of 6 Railbelt Reliability Council MOU August 20, 2018 ANCHORAGE MUNICIPAL LIGHT & POWER CHUGACH ELECTRIC ASSOC., INC. By: By: Mark Johnston, General Manager Lee Thibert, Chief Executive Officer Date: Date: GOLDEN VALLEY ELECTRIC ASSOC., INC. HOMER ELECTRIC ASSOC., INC. By: By: Cory Borgeson, Chief Executive Officer Bradley P. Janorschke, General Manager Date: Date: MATANUSKA ELECTRIC ASSOC., INC. SEWARD ELECTRIC SYSTEM By: By: Anthony M. Izzo, CEO/General Manager John Foutz, Utility Manager Date: Date: